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The Silliness Of Recapping Seed Rounds

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. So they recapitalize the company.

Recapitalization 70
Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70
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How to Be an Angel Investor

www.paulgraham.com

APRIL 28, 2010

2 ] When you negotiate terms with a startup, there are two numbers youcare about: how much money youre putting in, and the valuation ofthe company. The valuation determines how much stock you get. Ifyou put $50,000 into a company at a pre-money valuation of $1million, then the post-money valuation is $1.05

Angel Investor 63
Angel Investor Syndicate Syndication Dilution 63
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